Opening Statement from the February 2016 CCPM Forecaster

Opening Statement from the February 2016 CCPM Forecaster

Originally published on February 7, 2016

For several years we have been discussing our concerns of weak global demand as the primary cause of global disinflation and periodic deflation in select nations. This persistent trend of reduced output has been responsible for the deflation of the commodities bubble and a reduction in global economic growth rates. With each month it is becoming more apparent that...

It has now been more than one year since we first warned investors about a new economic period which we believed could begin as early as 2015. We previously discussed numerous events which have confirmed entry into this new economic period (see Volume 8, September 2015 CCPM Forecaster Opening Statement).

In the latest chapter of this new period, Japan became the first nation outside of the Eurozone to cut interest rates to a negative rate at -0.10%, joining Switzerland (-0.75%), Denmark (-0.65%) and Sweden (-0.35%). 

Playing catch-up as always, the IMF and World Bank once again slashed global economic growth estimates in January. For 2016 and 2017 the World Bank lowered global growth to 2.9% and 3.1%, respectively from the previous 3.3% and 3.2% estimates made in June 2015. Meanwhile, the IMF estimates global growth for 2016 and 2017 at 3.4% and 3.6%, respectively (a reduction of 0.2% for each year relative to its October 2015 update).

We believe economic estimates from the IMF remain too optimistic and will be revised down in coming months. Even the World Bank’s estimates are a bit optimistic in our view. 

The strength in